HEMANT B. OZA, MUMBAI v. ITO WD 15(2)(4), MUMBAI

ITA 591/MUM/2010 | 2004-2005
Pronouncement Date: 30-09-2011 | Result: Allowed

Appeal Details

RSA Number 59119914 RSA 2010
Assessee PAN AAGPO4854Q
Bench Mumbai
Appeal Number ITA 591/MUM/2010
Duration Of Justice 1 year(s) 8 month(s) 4 day(s)
Appellant HEMANT B. OZA, MUMBAI
Respondent ITO WD 15(2)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted H
Tribunal Order Date 30-09-2011
Date Of Final Hearing 02-08-2011
Next Hearing Date 02-08-2011
Assessment Year 2004-2005
Appeal Filed On 25-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH: MUMBAI BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO.591/MUM/2010 (ASSESSMENT YEAR: 2004-05) SHRI HEMANT B. OZA B-402 PANCHVATI APARTMENTS S.V. ROAD DAHISAR (E) MUMBAI -400 068 ....... APPELLANT VS ITO WD. NO. 15(2)(4) MATRU MANDIR 1 ST FLOOR MUMBAI -400 068 ..... RESPONDENT PAN : AAGPO 4854 Q APPELLANT BY : SHRI TARUN GHIA RESPONDENT BY : SH RI V.V. SHASTRI DATE OF HEARING : 0 2.08.2011 DATE OF PRONOUNCEMENT : 30.09.2 011 O R D E R PER R.S. PADVEKAR JM: IN THIS APPEAL THE ASSESSEE CHALLENGED THE IMPUGNE D ORDER OF THE LD. CIT (A)-25 MUMBAI DATED 24.11.2004 FOR THE A.Y. 2004-05. THE ASSESSEE HAS TAKEN MULTIPLE GROUNDS BUT A SOLI TARY ISSUE IS WHETHER THE A.O. WAS JUSTIFIED IN MAKING THE ADDITI ON OF RS 6 03 280/- AS UNEXPLAINED INVESTMENT. 2. THE FACTS WHICH REVEALED FROM THE RECORD ARE AS UNDER. THE ASSESSEE EARNS INCOME FROM COMMISSION AND BROKERAGE FROM THE TEXTILE. IN THE FINANCIAL YEAR 2003-04 THE ASSESSE E HAS PURCHASED A RESIDENTIAL FLAT IN DADAR (EAST) MUMBAI) JOINTLY WITH HIS BROTHER FOR 591/M/2009 HEMANT B. OZA 2 THE TOTAL PURCHASE PRICE OF ` L6 86121/- AND THE ASSESSEES SHARE IN INVESTMENT IN THE SAID FLAT WAS OF ` 8 83 061/-. THE ASSESSEE CLAIMED THAT THE INVESTMENT WAS MADE FROM THE SALE OF THE S HARES OF 6000 SHARES OF NAGESHWAR INVESTMENTS @ 102.50 PER SHARE. THE ASSESSEE STATED THAT HE HAD PURCHASED THE SAID 6 000 SHARES AT RS 2.02 PER SHARE AND SOLD AT A PRICE OF ` 12.02 PER SHARE AND SAID SHARES WERE PURCHASED THROUGH M/S. D.B. & CO. WHO SENT THEIR RE PLY TO THE A.O. VIDE LETTER DATED 21.08.2006 BY STATING THAT THEIR DATA WAS DESTROYED FROM THEIR COMPUTER HARD-DISC WHILE IT WAS UNDER RE PAIR. THE SAID BROKER ALSO SENT XEROX COPY OF CERTIFICATE ISSUED B Y THE VENDOR WHO CONFIRMED THE DELIVERY OF THE SAID SHARES. THE SAI D BROKER-COMPANY ALSO SUBMITTED THE COPIES OF THE COMPLAINT FILED FO R THE REPAIR OF THE COMPUTER HARD-DISC AND ALSO COPY OF THE COMPLAINT T O THE POLICE STATION REGARDING LOSS OF BOOKS OF ACCOUNT VOUCHER S AND OTHER RECORDS. THE SHARES WHICH WERE CLAIMED TO HAVE BEE N OWNED BY THE ASSESSEE WERE LISTED ON THE KOLKATTA STOCK EXCHANGE . THE ASSESSEE SOLD 6 000 SHARES OF M/S. NAGESHWAR INVESTMENTS @ 102.50 PER SHARE THROUGH SHRI RAJENDRAPRASAD SHAH A STOCK AND SHARE BROKER OF KOLKATTA STOCK EXCHANGE AND SAID TRANSACTION WAS EFFECTED ON 31.07.2003. THE ASSESSEE STATED THAT HE HAD PURCHA SED THE SAID SHARES PHYSICALLY IN APRIL 2002 AND TOOK THE DELIV ERY AND PAYMENT WAS MADE IN CASH. THE A.O. DID NOT ACCEPT THE GENU INENESS OF THE SHARE TRANSACTION CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE AS IN HIS OPINION WITHIN A PERIOD OF THE 14 MONTHS THE VALU E OF THE SHARES HAD INCREASED ABOUT 50 TIMES FROM THE DATE OF THE PURCH ASE OF SAID 6 000 SHARES TO DATE OF THE SALE. THE A.O. ALSO RAISED A QUESTION ON THE SAID SHARES WHY ONLY LISTED IN THE KOLKATTA STOCK EXCHAN GE AND NOT IN THE OTHER STOCK EXCHANGES. THE A.O. REJECTED THE CONTE NTION OF THE ASSESSEE THAT THE SHARE TRANSACTION WAS GENUINE AND THE ASSESSEE COULD GET THE TOTAL SHARE PRICE AT ` 6 14 280/-. THE A.O. MADE ADDITION U/S.69C OF THE ACT IN RESPECT OF THE INVESTMENT MAD E BY THE ASSESSEE IN THE RESIDENTIAL FLAT. THE ASSESSE CHALLENGED TH E ADDITION BEFORE THE 591/M/2009 HEMANT B. OZA 3 LD. CIT (A) BUT WITHOUT SUCCESS. AS THE LD. CIT (A ) CONFIRMED THE ADDITION MADE BY THE A.O. BY GIVING FOLLOWING REASO NS:- 9. I HAVE CONSIDERED THE RIVAL SUBMISSION COUNTER COMMENTS AND REMAND REPORT OF THE ASSESSING OFFICER AND FIND INGS OF THE ASSESSMENT ORDER CAREFULLY. WHILE EVALUATING T HE EVIDENCES ON RECORD AND SURROUNDING CIRCUMSTANCES O F THE ISSUE I FIND THAT APPELLANT HAS NOT PROVED THE GEN UINENESS OF SHARE TRANSACTION. RIGHT FROM THE BEGINNING LD . AR HAS BEEN GIVING VERY CRYPTIC REPLY THAT SHARES WERE NOT DEALT IN BOMBAY STOCK EXCHANGE OR NSE BUT WAS SOLD AT KOLKAT TA STOCK EXCHANGE AND APPELLANT HAD TRIED TO OBTAIN BU T HAS GOT COPY OF CSE FOR 1 ST AND 5 TH AUGUST 2003. SIMILARLY THERE ARE NO PROPER CONFIRMATION FORM M/S. D.B. & C O. FROM WHOM IT IS CLAIM THAT PURCHASE OF 6 000 SHARES WER E MADE ONLY FOR RS 12 220/-. M/S. D.B. & CO. DID NOT GIVE COMPLETE EVIDENCES BECAUSE OF ONE PRETENCE OR OTHER THAT DURING THE RENOVATION OF THEIR OFFICE SOME PAPERS W ERE MISPLACED OR COMPUTER HARD-DISC WERE DESTROYED. NO T ONLY THAT APPELLANT HAD ALSO FAILED TO PRODUCE XEROX COP Y OF SHARE CERTIFICATES IF IT IS CLAIMED TO BE PURCHASED IN APRIL 2002 AND SOLD ON 31.07.2033. ACCORDING TO THE ADMISSIONS OF THE APPELLANT IN LETTER DATED 14.09.2 006 6 000 SHARES WERE PURCHASED PHYSICALLY BY HIM IN AP RIL 2002 AND DELIVERY OF THE SAME WERE TAKEN AT THAT TI ME. THIS PURCHASE WAS MADE ON 09.04.2002 ONLY FOR RS 12 120/- BUT THE SAME HAS BEEN SOLD OUT FOR RS 6 14 400/- WHICH IS NEARLY 50 TIMES IN A SPAN OF 1 YEAR THEN DEFINITELY IF THERE WAS A GENUINE COMPANY THERE WO ULD HAVE BEEN SUBSTANTIAL PROFIT OF NAGESHWAR INVESTMEN TS WHICH COMPELLED THE INCREASE OF SHARE VALUE BUT AS HAS BEEN MENTIONED EARLIER APPELLANT HAD FAILED TO PROD UCE ANY OTHER EVIDENCE REVEALED THAT THERE WAS A FAKE ARRAN GEMENT 591/M/2009 HEMANT B. OZA 4 OF CAPITAL GAIN THROUGH SUCH COLOURABLE DEVICES LIK E DE-MAT ACCOUNT RECEIPTS THROUGH A/C PAYEE CHEQUE ETC. A N IMPORTANT POINT IS ALSO NOTICED THAT IN DE-MAT ACCO UNT APPEARING IN GREATER CO-OPERATIVE BANK LTD. DESCRIP TION OF SHARE OF 6 000/- @ RS 10/- IS APPEARING ON 26.07.20 03 AND FURTHER OF 6 000/- SHARES @ RS 10 000/- IS ON 01.08.2003 WHEREAS AS PER THE CLAIM OF THE APPELLA NT 6 000 SHARES WERE TRANSACTED ON 31.07.2003 THUS TH ERE IS APPARENT DIFFERENCE OF THE AMOUNT NOT ONLY THAT CH EQUE OF RAJENDRAPRASAD SHAH CLAIMED TO BE SHARE BROKER IS O F DATED 04.08.2003 WHEREAS IN DE-MAT ACCOUNT NO TRANSACTION IS APPEARING ON 31.07.2003 OR 04.08.200 3. FURTHER IT IS ALSO NOTICED THAT THIS DE-MAT ACCOUNT HAS BEEN OPENED IN ANDHERI MUMBAI ON 09.07.2003 ONLY AND TH ERE IS NO SERIES OF TRANSACTION EXCEPT THE TRANSACTION OF NAGESHWAR INVESTMENT THAT TO FOR RS 60 000/- ONLY. ALL THESE FACTS REVEALS THAT THERE WAS A FAKE ARRANGEME NT OF SHARE TRANSACTION FOR JUSTIFYING THE CAPITAL GAIN A ND INVESTMENT IN IMMOVABLE PROPERTY. THEREFORE THE F INDINGS OF THE ASSESSING OFFICER ABOUT THE GENUINENESS OF TRANSACTION ARE FOUND TO BE CORRECT. FURTHER DURIN G THE COURSE OF REMAND PROCEEDING APPELLANT HAD FAILED TO PRODUCE SATISFACTORY EVIDENCES AND FURTHER CORROBOR ATIVE EVIDENCES OF THE GENUINENESS OF SHARE TRANSACTIONS APPARENTLY APPELLANT COULD NOT GIVE EVIDENCE OF AC TUAL DELIVERY OF SHARES CLAIMED TO BE PURCHASED DURING THE REMAND PROCEEDING SO AS TO MERIT A CHANGE OF REASON ING OF THE ASSESSING OFFICER MENTION IN THE ASSESSMENT ORD ER. THEREFORE I FIND THAT WITH A VIEW TO JUSTIFY THE I NVESTMENT IN RESIDENTIAL FLATS SUCH STORY OF PURCHASE AND SAL E OF SHARES HAS BEEN PUT UP THROUGH DOCUMENTARY EVIDENCE S WHICH IN INQUIRY FOUND TO BE INGENUINE. THEREFORE SOURCE 591/M/2009 HEMANT B. OZA 5 OF INVEST OF RS 6 02 280/- IS NOT FOUND PROVED HEN CE ADDITION MADE BY THE ASSESSING OFFICER IS UPHELD. 3. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS OF THE PARTIES A ND PERUSED THE RECORDS. IN SUM AND SUBSTANCE THE A.O.S REASONS I N MAKING THE ADDITION AND DISBELIEVING TRANSACTION OF THE SHARES ARE THAT:- I) THERE IS UNPRECEDENTED INCREASE IN THE VALUE OF THE SHARES AS HIGH AS 50 TIMES WITHIN A SHORT SPAN OF 14 MONTH S; II) IN D-MAT ACCOUNT ONLY TRANSACTION AS OF THE M/S. NAGESHWAR INVESTMENTS SHARES IS SHOWN; III) THE SHARES WERE LISTED ONLY AT KOLKOTA STOCK EXCHAN GE. THERE IS NO DISCUSSION IN RESPECT OF THE CONFIRMATI ON GIVEN BY M/S. D.B. & CO. REGARDING DELIVERY OF THE SAID S HARES. 5. WE FIND THAT NOTHING IS BROUGHT ON RECORD BY THE A.O. TO SHOW THAT FINANCIAL STABILITY OF M/S. NAGESHWAR INVESTME NTS WHEREBY THERE WAS NO POSSIBILITY OF INCREASE IN MARKET PRICE OF T HE SHARES. THE A.O. HAS ONLY RAISED A DOUBT THAT HOW THE PRICE OF THE S HARE COULD GO AS HIGH AS 50 TIMES. IN THE PRESENT CASE WE FIND THAT THE SHARES WERE LISTED ON THE KOLKOTA STOCK EXCHANGE. THE ASSESSEE ALSO PRODUCED THE QUOTATION OF THE KOLKOTA STOCK EXCHANGE BEFORE THE A.O. WE FURTHER FIND THAT THE CONCERNED SHARE BROKER THROUGH WHOM T HE ASSESSEE HAS PURCHASED THE SAID SHARES HAS FILED A CONFIRMATION THAT THERE WAS A SHARE TRANSACTION BY THE ASSESSEE AND THE SAID SHAR ES WERE ALSO SOLD. THE INABILITY OF THE SHARE-BROKER TO PRODUCE THE ST ATEMENT OF ACCOUNT CANNOT BE THE REASON TO RAISE THE QUESTION IN RESPE CT OF SHARE TRANSACTION OF THE ASSESSE WHEN ADMITTEDLY ASSESSE PRODUCE NECESSARY EVIDENCE TO PROVE GENUINENESS OF SAID SHARE TRANSAC TION. 591/M/2009 HEMANT B. OZA 6 6. ON THE PERUSAL OF THE ORDER OF THE LD. CIT (A) W E FIND THAT THE ASSESSEE ALSO PRODUCED THE D-MAT ACCOUNT. IT APPEA RS THAT WHEN THE SHARES WERE PURCHASED BY THE ASSESSEE THE SAME WER E IN THE PHYSICAL FORM BUT SUBSEQUENTLY THOSE SHARES WERE CONVERTED E LECTRONIC FORM. IN OUR OPINION ASSESSEE HAS PRODUCED SUFFICIENT PR OOF LIKE THE CONFIRMATION FROM THE BROKER D-MAT ACCOUNT TO SUPP ORT HIS CLAIM BUT THE A.O. HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO CONTROVERT CLAIM OF THE ASSESSEE. MOREOVER THE SHARES WERE LISTED ON THE KOLKOTA STOCK EXCHANGE. THUS IN OUR OPINION THE SHARES TRANSA CTION OF THE ASSESSEE CANNOT BE DOUBTED. THERE IS NO JUSTIFICAT ION ON THE PART OF THE A.O. TO DISBELIEVE THE SHARES TRANSACTION OF T HE ASSESSEE AND TO MAKE THE ADDITION U/S.69C OF THE ACT. AS PER FACTS AND EVIDENCE ON RECORD WE HOLD THAT THE SHARE TRANSACTION OF THE A SSESSEE WAS GENUINE AND THE ADDITION CANNOT BE SUSTAINED. WE ACCORDINGLY DELETE THE ADDITION OF RS 6 02 280/- MADE BY THE A. O. 7. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 3 0TH SEPTEMBER 2011. SD/- SD/- ( P.M. JAGTAP ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATED : 30TH SEPTEMBER 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) -26 MUMBAI. 4) THE CIT-CITY-15 MUMBAI. 5) THE D.R. H BENCH MUMBAI BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN 591/M/2009 HEMANT B. OZA 7 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 20.09.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 27.09.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER